Telco competition notices up for debate

The federal government has invited the telecommunications industry to comment on ways the competition watchdog can more effectively act against anti-competitive conduct.The invitation is one of several in a discussion paper presenting various options to reform the industry's regulatory regime "irrespective of whether the full sale of Telstra proceeds".

The federal government has invited the telecommunications industry to comment on ways the competition watchdog can more effectively act against anti-competitive conduct.

The invitation is one of several in a discussion paper presenting various options to reform the industry's regulatory regime "irrespective of whether the full sale of Telstra proceeds". The Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, released the paper this morning.

The government said "in March 2004, the [Australian Competition and Consumer Commission] issued a competition notice in respect to Telstra's pricing of broadband services.

"In light of ... events in relation to this competition notice, interested parties may wish to comment on whether the powers of the ACCC under the existing competition notice provisions of part XIB [of the Trade Practices Act] are effective in enabling it to respond appropriately to allegations of possible anti-competitive conduct in the telecommunications industry".

The government said when the part XIB provisions were introduced in 1997, "there were suggestions that [they] would be transitional in nature pending the development of sustainable competition in the telecommunications sector".

The call came after Telstra and the ACCC settled a competition notice dispute earlier this year under arrangements that attracted deep criticism from some industry players.

The government also asked the industry through the discussion paper whether it was desirable to impose additional regulatory restrictions on so-called bundled offerings of communications products and services.

It also raised the issue of whether additional restrictions should be placed on carriers rolling out new network infrastructure -- or reducing prices for existing services -- in areas where other competitors are also developing new networks.

"Examining these issues is key to ensuring there is effective competition and future investment in telecommunications in Australia over the next five to 10 years," Senator Coonan said. "It is important there is an opportunity for the telecommunications industry, consumers and other interested parties to have their say on what changes to the telecommunications competition regime in these areas may be appropriate or desirable".

The paper emphasised that "the government has ruled out forced structural separation of Telstra" after several suggestions that some form of "operational" separation of the telco giant is needed.

The ACCC previously suggested that an internal separation should be done between a "retail business" -- supplying services to end-users -- and a "network business" -- supplying wholesale services to both the Telstra retail business and those seeking access to its services.

"It has been argued that such changes would increase the transparency of Telstra's network and retail costs and operational activities, and therefore improve the ACCC's ability to investigate and identify possible instances of anti-competitive conduct by Telstra.

"In turn, it has been suggested that this would enable Telstra's competitors to have greater confidence in the enforceability of the existing regulatory regime," the paper said.

The suggested changes may reduce the need for other forms of regulation within the industry. However, "there would potentially be significant costs and other complexities associated with any reconfiguration of Telstra, including possible losses of economies of scale and scope as well as transitional implementation costs".

"It is possible that some of these costs may be reduced if operational separation was confined to future new networks --such as fibre customer access networks-- if they seemed likely to have monopoly characteristics," the paper said.

Questions are raised on what the possible benefits an operational separation will have on both Telstra and its customers. The paper also asks about possible problems and issues that would arise from Telstra's operational separation.

"The issues and options for change raised in the paper are for discussion purposes only. They do not indicate any preference by the government for any particular option or course of action," Senator Coonan clarified.

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